View more on these topics

With-profits warning after sales soar

Leading advisers have warned that advisers must be able to justify the sale of high-commission with-profits bonds as evidence suggests sales are rising substantially.

Hargreaves Lansdown managing director Peter Hargreaves believes the “with-profits shovels” are out again, with some advisers chasing the high commission paid on single-premium with-profits bonds.

Hargreaves says: “Why would you put money in a fund when the assets in which it invests are all depressed and any increase can be held back? This indicates that bonuses will be low and in some cases zero. Surely, the time to use with-profits is when markets are high and likely to decline not low and likely to recover?”

Legal & General last week reported a 133 per cent year on year increase in with-profits bond sales from £48m in the first half of 2007 to £112m in the first half of this year. Prudential has seen a 182 per cent rise in with-profits bond sales in the first half of 2008 to £48m.

Hargreaves says product providers are not widely advertising the product or highlighting increased sales, as they do not want to “rock the boat”.

Richard Jacobs Pension and Trustee Services managing director Richard Jacobs says: “Provider sales representatives say with-profits bond sales have been increasing. The funds that have performed well have been the ones with higher equity content. I am not concerned about the risk that funds take on as long as the consumer is aware of this but there is still a perception that with-profits are safe and cannot go down.”

Recommended

Heavy-handed opinion

This is a one-off, as I do not intend conducting a protracted correspondence via the letters page. Nonetheless I am compelled to write, having read Nic Cicutti’s column (Money Marketing, August 7) which he kindly devoted to me.

Singapore cover image - thumbnail

White paper — Singapore International Insights

Jelf Employee Benefits assesses key trends within the international private medical insurance provision of organisations with employees in Singapore. Benefit structure, cost management and healthcare facilities are examined and key considerations are highlighted. This edition will be of particular interest to global human resource directors and benefit managers with local and expatriate populations in Singapore.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com